Weizmann Institute of Science v. Neschis

• Decision Date: 03 October 2002
• Docket Number: No. 00 CIV.7850(RMB).,No. 01 CIV.6993(RMB).,00 CIV.7850(RMB).,01 CIV.6993(RMB).
• Citation: 229 F.Supp.2d 234
• Parties: WEIZMANN INSTITUTE OF SCIENCE, Plaintiff, v. Janet C. NESCHIS, individually and in her capacities as Trustee of the Jacques and Natasha Gelman Trust dated November 18, 1997, and as Trustee of the Trust Created Under the Last Will and Testament of Natasha Gelman dated April 23, 1993, Robert R. Littman, individually and in his capacity as Successor Trustee of the Trust Created Under the Last Will and Testament of Natasha Gelman dated April 23, 1993, and Marilyn G. Diamond, in her capacity as Trustee of the Jacques and Natasha Gelman Trust dated November 18, 1997, and as Trustee of the Trust Created Under the Last Will and Testament of Natasha Gelman dated April 23, 1993, Defendants. Alice Ann Jung on her own behalf, as Executrix of the Estate of Miroslav Jung, Deceased, Josef Jung, Michelle Jung, and Jaroslav Jung a/k/a Jerry Jung, Plaintiffs, v. Janet C. Neschis, individually and in her capacities as Trustee of the Jacques and Natasha Gelman Trust dated November 18, 1997, and as Trustee of the Trust Created Under the Last Will and Testament of Natasha Gelman dated April 23, 1993, Robert R. Littman, individually and in his capacity as Successor Trustee of the Trust Created Under the Last Will and Testament of Natasha Gelman dated April 23, 1993, and Marilyn G. Diamond, in her capacity as Trustee of the Jacques and Natasha Gelman Trust dated November 18, 1997, and as Trustee of the Trust Created Under the Last Will and Testament of Natasha Gelman dated April 23, 1993, Defendants.
• Court: U.S. District Court — Southern District of New York

229 F.Supp.2d 234

WEIZMANN INSTITUTE OF SCIENCE, Plaintiff, v. Janet C. NESCHIS, individually and in her capacities as Trustee of the Jacques and Natasha Gelman Trust dated November 18, 1997, and as Trustee of the Trust Created Under the Last Will and Testament of Natasha Gelman dated April 23, 1993, Robert R. Littman, individually and in his capacity as Successor Trustee of the Trust Created Under the Last Will and Testament of Natasha Gelman dated April 23, 1993, and Marilyn G. Diamond, in her capacity as Trustee of the Jacques and Natasha Gelman Trust dated November 18, 1997, and as Trustee of the Trust Created Under the Last Will and Testament of Natasha Gelman dated April 23, 1993, Defendants.

Alice Ann Jung on her own behalf, as Executrix of the Estate of Miroslav Jung, Deceased, Josef Jung, Michelle Jung, and Jaroslav Jung a/k/a Jerry Jung, Plaintiffs, v. Janet C. Neschis, individually and in her capacities as Trustee of the Jacques and Natasha Gelman Trust dated November 18, 1997, and as Trustee of the Trust Created Under the Last Will and Testament of Natasha Gelman

dated April 23, 1993, Robert R. Littman, individually and in his capacity as Successor Trustee of the Trust Created Under the Last Will and Testament of Natasha Gelman dated April 23, 1993, and Marilyn G. Diamond, in her capacity as Trustee of the Jacques and Natasha Gelman Trust dated November 18, 1997, and as Trustee of the Trust Created Under the Last Will and Testament of Natasha Gelman dated April 23, 1993, Defendants.

No. 00 CIV.7850(RMB).

No. 01 CIV.6993(RMB).

United States District Court, S.D. New York.

October 3, 2002.

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Janet Neschis, Marilyn Diamond, Paul Curran Kaye, Scholer, Fierman, Hays &

Handler, LLP, New York City, for Plaintiff.

Leon P. Gold, Elise A. Yablonski, Proskauer Rose, Rose, LLP, New York City, for Defendants.

BERMAN, District Judge.

I. Introduction

Plaintiff Weizmann Institute of Science ("Weizmann") commenced an action against defendants Janet C. Neschis ("Neschis"), Robert R. Littman ("Littman"), and Marilyn G. Diamond ("Diamond") (collectively, "Defendants") on or about October 16, 2000. Weizmann's complaint ("Weizmann Complaint") alleges six causes of action: (i) declaratory judgment that Weizmann is entitled to 37% of the assets of the Anturia Foundation, a non-party; (ii) conversion; (iii) tortious interference with contractual relations; (iv) tortious interference with expectancy of inheritance; (v) violation of 18 U.S.C. § 1962(c); and (vi) violation of 18 U.S.C. § 1962(d).¹ Weizmann alleges that the Court has jurisdiction over its claims pursuant to 18 U.S.C. § 1965(a) (RICO), 28 U.S.C. § 1331 (federal question), 28 U.S.C. § 1332(a)(2) (diversity), and 28 U.S.C. § 1367 (supplemental jurisdiction). (Weizmann Complaint ("WC") ¶ 4).

Plaintiffs Alice Ann Jung, Josef Jung, Michelle Jung, and Jaroslav Jung, a/k/a Jerry Jung (collectively, "Jungs") commenced an action against Defendants on or about July 30, 2001.² The Jungs' complaint ("Jung Complaint") alleges nine causes of action: (i) declaratory judgment that the Jungs are entitled to 20% of the assets of the Anturia Foundation, a nonparty; (ii) conversion; (iii) tortious interference with contractual relations; (iv) tortious interference with expectancy of inheritance; (v) violation of 18 U.S.C. § 1962(c); (vi) violation of 18 U.S.C. § 1962(d); (vii) injunctive relief; and (viii) two counts seeking a constructive trust. The Jungs allege that the Court has jurisdiction over their claims pursuant to 18 U.S.C. § 1965(a) (RICO), 28 U.S.C. § 1331 (federal question), and 28 U.S.C. § 1367 (supplemental jurisdiction); they appear not to have plead diversity jurisdiction. (Jung Complaint ("JC") ¶ 13).

On September 26, 2001, the Court consolidated these two cases for pre-trial purposes, including motion practice. On or about October 19, 2001, Defendants moved jointly, pursuant to Federal Rules of Civil Procedure ("Fed. R. Civ.P.") 12(b)(6) and 12(b)(7), to dismiss Plaintiffs' claims for, inter alia, failure to state a claim upon which relief can be granted and failure to join a necessary party, i.e., the Anturia Foundation. See Defendants' Joint Memorandum of Law in Support of Their Motion to Dismiss the Complaints, dated October 19, 2001 ("Def.Mem."). On November 15, 2001, Plaintiffs filed their Joint Brief in Opposition to Motion to Dismiss ("Pl. Opp." or "Opposition Brief"). Defendants filed a reply brief, dated November 20, 2001 ("Def.Reply"). On December 17 2001, Plaintiffs moved jointly for a preliminary injunction "pending the Court's decision on [D]efendants' currently pending motions to dismiss...." Notice of Motion for a Preliminary Injunction, dated December 17, 2001, at 2.

For the reasons set forth below, Defendants' motion to dismiss is granted in part and denied in part and Plaintiffs' motion for a preliminary injunction is denied.³

II. Background

The following allegations from the Weizmann Complaint and the Jung Complaint are taken as true for the purposes of this motion. Jacques and Natasha Gelman, a married couple with no children, amassed a great personal fortune as a result of Mr. Gelman's successful career as an entertainment agent and film producer. (WC ¶ 10; JC ¶¶ 29-30). In 1985, the Gelmans deposited a substantial portion of their assets into a Liechtenstein "stiftung" called the Anturia Foundation ("Anturia" or "Foundation").⁴ (WC ¶ 11; JC ¶ 31). The Foundation's Board of Trustees ("Board") enacted various sets of by-laws over time, all of which provide for the distribution of the Foundation's assets upon the death of the surviving Gelman spouse.⁵ (WC ¶ 13; JC ¶ 34).

After Mr. Gelman's death on July 23, 1986, Mrs. Gelman instructed the Board to make two sets of changes to the Foundation's by-laws.⁶ (WC ¶¶ 15, 20; JC ¶¶ 37-38). Pursuant to her instructions, the Board adopted by-laws, dated August 10, 1989 ("August 10, 1989 By-Laws") which provided that, in the event of Mrs. Gelman's death, the Foundation's assets would be divided as follows: (1) 20% to Weizmann; (2) 34% (collectively) to the Jungs; and (3) 46% (collectively) to other named charities and beneficiaries.⁷ In 1991, pursuant to Mrs. Gelman's instructions, the Board adopted by-laws dated August 13, 1991 ("August 13, 1991 By-Laws"). The August 13, 1991 By-Laws provided for the following distribution of the Foundation's assets upon Mrs. Gelman's death: (1) 20% to Weizmann; (2) 37% (collectively) to the Jungs; (3) 1% to Littman; and (4) 42% (collectively) to other named charities and beneficiaries. (WC ¶ 18; JC ¶ 41).

Plaintiffs allege that Mrs. Gelman developed Alzheimer's disease in late 1991 and that either the August 10, 1989 By-Laws or the August 13, 1991 By-Laws (or both documents together) "were the last bylaws executed in accordance with Mrs. Gelman's instructions while Mrs. Gelman remained of sound mind and free of duress and undue influence." (WC ¶ 19-20; JC ¶ 43-44).⁸

Mrs. Gelman possessed other assets which were not part of the Foundation and which were to be disposed of by will to be probated in New York ("New York assets"). (WC ¶ 17; JC ¶ 40). Until 1989, Sidney Cohn, Esq. ("Cohn") prepared the Gelmans' wills and codicils. (WC ¶ 22; JC ¶ 49). Thereafter, Mrs. Gelman was represented by Diamond until Diamond became a Justice of the New York State Supreme Court, New York County, in 1991. (WC ¶¶ 9, 22; JC ¶¶ 26, 50). Neschis, Cohn's daughter and Diamond's former partner, became Mrs. Gelman's attorney in 1991. Id. Plaintiffs allege that beginning in late 1991, after Neschis became Mrs. Gelman's legal representative and continuing until Mrs. Gelman's death on May 2, 1998, Neschis and Littman took (unfair) advantage of Mrs. Gelman's mental condition by, among other things, "cementing themselves as the sole custodians of her substantial estate and charitable trust, unlawfully taking millions of dollars from Anturia Foundation and Mrs. Gelman's personal assets, and increasing the bequests, commissions and/or fees to be received by these defendants." (WC ¶ 23; JC ¶ 51).

Plaintiffs allege that Neschis and Littman "fraudulently assum[ed] fiscal authority over Mrs. Gelman's assets," by, among other things, securing the following documents after Mrs. Gelman no longer possessed mental or testamentary capacity: (1) general powers of attorney in favor of Neschis and Littman and (several) powers of attorney which gave Neschis the authority to conduct transactions at Mrs. Gelman's New York banks; (2) a last will and testament, executed on April 23, 1993 ("1993 Will"), appointing Neschis as executor and appointing Diamond and Littman as alternate executors; and (3) an affidavit by Mrs. Gelman, signed on October 28, 1994, stating that, at the time of the 1993 Will, she intended that Neschis receive a commission for her services as executor and that Neschis' law firm receive legal fees for administering her estate.⁹ (WC ¶¶ 23-29; JC ¶¶ 51-53, 75-88).

Plaintiffs further allege that Neschis "fraudulently obtained" an amendment to the Foundation's by-laws which eliminated Weizmann as a beneficiary and drastically reduced the amount of the bequests to the Jungs. (WC ¶ 33; JC ¶ 60). "In or about April 1992, Neschis traveled to Zurich with Mrs. Gelman to meet with representatives of Credit Suisse and/or Fides, the asset management company responsible for administering the ... Foundation." (WC ¶ 30; JC ¶ 54). During this trip, Dr. Madeline-Claire Levis ("Levis"), a Fides employee, came to believe that Mrs. Gelman was not of sound mind. (WC ¶ 30; JC ¶ 55). Plaintiffs allege that Neschis fraudulently obtained Mrs. Gelman's signature on a letter dated June 5, 1992 to the Board ("June 5, 1992 Letter"), instructing that certain changes be made to the by-laws, and transmitted the letter to Levis.¹⁰ (WC ¶ 33; JC ¶¶ 60-62). Although Levis initially "refused to make the requested changes without a...